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Debt since mortgage

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Hello

Since taking out our first time buyer mortgage, our circumstances have changed.

We took a lot of credit card debt-90% (~£28,000 )of available and a loan (£12,000) out to pay for significant home improvements and purchase our car on its balloon payment. We have also purchased another car due to working pattern change.

However, I have had a ~£10,000 increase in pay and my student loan will finish 3 months after the end of the fixed deal.

I don’t want to pay the default tracker mortgage, but equally don’t want to be declined for other offers. We aim to pay approx 15% of the debt off before our fixed deal ends (next August).

Any particular advice on mortgage choices?

TIA
«1

Comments

  • Income and mortgage size?
  • Hill_
    Hill_ Posts: 5 Forumite
    Thanks

    Applicant 1: 50,000
    Applicant 2: 8,000

    Mortgage size: 200,000
  • Retired_Mortgage_Adviser
    Retired_Mortgage_Adviser Posts: 590 Forumite
    500 Posts Name Dropper
    edited 26 November 2019 at 10:19AM
    Based on the limited information in your post, 200k is going to be very tight to nigh on impossible. You have probably already checked out some bank affordability calculators which will give you a rough indication of how much you could borrow, such as the Nationwide one here, should give you borrowing in a range of 80-100k, I would estimate.
    https://www.nationwide-intermediary.co.uk/calculators/affordability-calculator

    But as always, the devil is in the detail. I would recommend getting in touch with one of the brokers recommended by MSE for a no obligation look at how much you can borrow, considering the entirety of your circumstances. Even so, getting to 200k with 58k income and 40k unsecured debt is going to be a very tough ask, even without considering other aspects like dependents, etc.

    Any way of paying down the cc debt somewhat? That will have an outsize impact on affordability. To give a very crude estimation, at around 200k of borrowing, every 1k of credit card debt will reduce your max borrowing by 6-7k.
  • Thanks for the information and the link. I've completed it with all of the requested information and it's not positive.

    I considered getting another loan to consolidate the debts, but I know that I won't even come close to getting a loan of that size to do it in, especially as I already have a car PCP and loan in my name already.

    There's some limited scope to reduce the CC debt, but not significantly. Looks like I'll be on their default payment.... :(

    Thanks for the advice though.
  • What's the value of the property? If there is sufficient equity, a remo with debt consolidation *might* be an option open to you. You could always just stay with the current lender doing a product switch (no paperwork, no affordability checks, etc).
  • ACG
    ACG Posts: 24,547 Forumite
    Part of the Furniture 10,000 Posts Name Dropper I've helped Parliament
    Who is your current lender?
    Can you not just switch products with them? It might not be a fantastic deal but it will hopefully be better than the SVR.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • To echo the above, just stay with your current lender and switch to another product. Assuming you are with a mainstream lender, you should have access to plenty of options that are well below their ridiculous standard rate (usually 4-5%+).

    Product transfers for most banks are a simple click-click-click affair - no questions asked, no income or affordability checks, no credit checks.
  • bamgbost
    bamgbost Posts: 482 Forumite
    Part of the Furniture 100 Posts Photogenic Name Dropper
    In a very similar predicament to OP. And coincidentally our 2 year deal ends in August too!

    Is what everyone saying is to be safe and avoid any credit check etc. Just stay with same lender, but on their next best deal (that doesnt require credit check) and that will do in the interim until credit file is healthier?
    Am i understanding correctly?

    And as an example, I am currently with Halifax. What deal would that look like?
    365 Day 1p challenge - £371.49 / 667.95
    Emergency Fund   £1000 / £1000 ( will enlarge once debts are cleared)
    DFW - £TBC
  • What's the outstanding mortgage amount and property value?


    bamgbost wrote: »
    And as an example, I am currently with Halifax. What deal would that look like?
  • Hill_
    Hill_ Posts: 5 Forumite
    Thanks for the replies.
    The value of the property is between £225,000-230,000, so it would be ~89% LTV. Without checking my paperwork, I think there will be just under £200,000 (maybe 195) I'd much rather consolidate the debt, but know that they won't lend that much :(

    My mortgage is with Virgin Money - so perhaps switching to another of their deals is my best option as suggested??
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